Record number of new cars sold with 0-pct financing in March

17:07, April 21, 2010      

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A record number of new vehicles were purchased with zero-percent financing in March as carmakers and finance companies have presumably lowered standards to boost sales, according to a car portal.

More than 22 percent of financed new cars were sold with zero-percent finance deals in March, compared with 13 percent in the year-ago period and registered a slightly higher increase from the previous high of 21 percent in July 2006, said, a Santa Monica-based online resource for automotive information.

Seventy-one percent of new Toyotas financed in March had a zero-percent APR (annual percentage rate) -- nearly twice the previous Toyota record of 39 percent in August 2009.

Toyota Motors has recalled 8.2 million vehicles since November for problems including floor mats that get tangled with the gas pedal and gas pedals that stick, causing sudden acceleration. The major Japanese automaker has agreed to pay a fine of nearly 16.4 million U.S. dollars to settle a complaint that it failed to tell regulators of potentially dangerous defects.

Toyota also promised to recall 9,400 Lexus GX 460 SUVs after Consumer Reports issued a rare "Don't Buy" warning amid concerns that the large SUV has handling problems which could cause it to roll over during sharp turns.

The two brands that trail behind with high percentages of such deals were Mazda at 58 percent of all financed transactions and Mercury at 32 percent, according to the car portal.

In part because of low-interest financing deals on new cars, more than 100 new vehicles currently cost less than their one-year old used counterparts, it said. A typical brandnew BMW X5's monthly payment amounts to 849 dollars, while a used vehicle costs 10 dollars more.

"Credit must be starting to loosen if almost a quarter of all transactions financed in March were approved for zero-percent financing," said Jessica Caldwell, senior analyst for "Certainly it seems as if Toyota Motor Credit and other captive finance companies may have lowered standards to help improve sales."

Senior consumer advice editor of the portal, Philip Reed, said many car buyers don't realize that they have to qualify for special financing deals.

"Shoppers should always check their credit score and secure financing from a bank or credit union before setting foot in the dealership so that they have a back-up plan if they get declined when seeking the special deals," he said.



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